1. METAC Workshop March 14-17, 2016 Beirut, Lebanon National Accounts Compilation Issues Session 5.1: Construction, Price and Volume measures

2. Content Construction output, specific features Data available – Price indices – Volume data – Administrative data Methods – Complete construction – Other elements of construction output

3. Construction output … covers a wide range of products: – one-dwelling and multi-dwelling buildings, – industrial and commercial buildings, – highways, railways, and other major civil engineering projects. Types of construction work: – new construction, – major improvement of existing structures and – regular repair and maintenance.

4. Construction output Other features of the construction activity require attention in measuring output at both current and constant prices: – projects may span two or more accounting periods; – project can be considered unique and should therefore be decomposed wherever possible into standard activities that can be priced between periods

5. Data available Input, Output, and Seller's price indices used for deflation of specific type of construction output; The Purchasing Power Parities (PPPs) program for construction: – … collection of detailed data which can be used as a helpful comparative source for pricing a 'standard' output; Quantitative information on building materials used; Labor input; Administrative data on government projects.

6. Methods Deflation – Input price indices – Output price indices – Seller's price indices

7. Methods Deflation, using input price indices Possible methods for estimating output price indices: – "actual prices" method takes data from real projects undertaken during the period, or adjusts tender price indices to match the relevant time period … resource intensive, but can be used for all types of construction, if suitably weighted, if some generic designs are used repeatedly, and if a sufficiently large sample of projects is taken; not appropriate for unique projects; – "model pricing" method, which constructs a theoretical "model project" (such as a one-family dwelling) using tender price data from standard price books or statistical surveys;

8. Methods Possible methods for estimating output price indices: – "hedonic" method, which attempts to define the quality of a structure in terms of its characteristics and regress them against price … employed only in suitable areas of construction. Volume methods, if there is no options for detailed deflation – measuring cubic meters of construction, or – the number of building permits issued

9. Methods Civil Engineering – decomposition of the project into a set of more measurable components; – collect detailed prices as part of the administrative control of public building contracts Repair/Maintenance – collect data on hourly rates or quotes for 'model' jobs from contractors, and then to use these as indicators of price; – for small repair and maintenance work undertaken by private households: CPI indices for materials commonly used in these activities can be employed

10. Methods Own account construction – deflated by an appropriate index, the closest market-based index available related to residential dwellings or a subset of that

11. References 2008 SNA, Chapter 15 Construction Price Indices, OECD-Eurostat Handbook on price and volume measures in national accounts, Eurostat

12. Thank you